Well, if I can remember from my time in Nagoya, 
here's a few answers for you:

-Can you exchange an IPMO for cash anywhere other
than a post office?

Not to my knowledge.  But there's tons of post 
offices everywhere, so it shouldn't be too much 
of a problem.  I don't believe you can cash a 
IPMO at a bank, but if you have a regular bank 
money order or check or something like that, I 
think you will be able to cash them at the bank.

-Compared to the exchange rates in newspapers,
what kind of rates do you get?
EX:  newspaper prints 120 yen/dollar, you get 116
yen/dollar.

No, whatever the rate is, that's what you'll 
get, I believe.  Sometimes, though, at like a 
bank or something when you EXCHANGE cash for 
yen, you will get a slightly lower rate.  I 
think that's sorta like a fee the bank claims 
for exchanging money.

-Are there any fees associated with cashing 
postal money orders?  

Nope, I didn't have any problem cashing IPMOs 
from the states.  The first time I went to one 
post office, they kinda looked at it weird, 
probably because they don't get many people in 
there with IPMOs that they need cashed, but 
after that, they got used to me and everything 
was ok.  ^^

Good luck!
Rekka